Kiwi International was founded by a group of Eastern Air Lines pilots[7] led by Robert Iverson in a plan to re-employ former Eastern and Pan Am pilots and managers using their help and capital. In its history, the airline flew 8,000,000 passengers without an incident.[2]

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Originally, the intent was to purchase the Pan Am Shuttle. When Iverson presented a Kelso and Company backed $100,000,000 offer to Pan Am, it was rejected in favor of a Delta Air Lines offer.[citation needed] With advice from the FAA it was decided to start a new airline. Under the name Kiwi Acquisition Group, Iverson raised $2,000,000 from pilots at $50,000 apiece with promise of employment as a Captain. The former airline employees had formed a group and called themselves Kiwis because they were no longer flying, just like the flightless kiwi birds.[8] When it came time to name the new airline, it was decided to keep the association name.

Kiwi first flew on September 21, 1992 using two refurbished 727-200s from Lufthansa on routes between Newark and Chicago and Orlando.[citation needed] It offered gourmet meals and expanded legroom of 36 inch pitch. Within one year Kiwi had fifteen planes and 1200 employees doing $116,000,000 in business. During its expansion Kiwi's experienced cockpit and cabin crews earned the airline numerous industry awards including Best Airline in America from Condé Nast Traveler and the first ever "President's Award of Merit" from the Inflight Catering Association for one class in-flight service. Iverson was given a Laureatte Award from Aviation Week and Space Technology and secured a passenger sharing agreement from Richard Branson to feed Kiwi into Virgin flights.[citation needed] Branson promoted the concept and called Kiwi his favorite US airline.

In 1993, Kiwi placed an order for 11 BAC One-Eleven aircraft and five options. The British designed aircraft were to be built in Romania. Romaero, the Romanian partner, failed to find funding to develop the variant, which would be equipped with modern Rolls Royce Tay engines, and scrapped the plan.[9]

A Boeing 727-200 of Kiwi landing at Newark International Airport (1994)

Kiwi International Air Lines enjoyed a flawless safety record and near perfect dispatch reliability rate of 99.6% in its expansion. On the strength of its market reputation, Iverson secured a $25,000,000 IPO proposal co-managed by Dillon Read and Goldman Sachs in fall 1994. When the pilot investors fractured along geographic lines the offer was rejected by the board. In February 1995, founder and chairman Robert Iverson departed.[4]

After Iverson's departure, the board hired professional (non-pilot) management and advisers. In 1996, KIWI succeeded to secure a $20 million financing package from Recovery Equity Partners, a CA-based private equity fund through the effors of Conexus. At the time Kiwi received the first tranche of the financing package, ValuJet Flight 592 and TWA Flight 800 had accidents in May and July 1996 that caused the death of more than 300 passengers. Following these unrelated accidents, the FAA also increased its surveillance of the airline industry. Because of alleged maintenance documentation issues, Kiwi International was asked to temporarily ground 25% of its fleet. But the airline was allowed to fly again soon after.[citation needed]

Kiwi, called "one of the best of the recent start-up lines" by Consumer Reports Travel Letter, filed for bankruptcy on September 30, 1996 and after failing to find additional financing, stopped scheduled service on October 15.[10] Ed Perkins, editor of the Travel Letter, noted that other members of the travel press blamed the bankruptcy on chronic undercapitalization, problems with the FAA, and the "media's indiscriminate innuendos about the safety of all low-fare airlines following the Valujet crash"; Perkins suggested a fourth problem for Kiwi: the "pervasive power of the giant lines' frequent-flyer programs," noting Kiwi targeted business travelers.[10] Perkins pointed out that Kiwi's competitors were matching its fares, so their willingness to also include frequent-flyer miles - worth about $12-15 per one-way trip - resulted in a loss of customers for Kiwi even after it belatedly established its own program.[10]

In July 1997, a Federal bankruptcy judge agreed to liquidate Kiwi in a $16.5 million deal: Joe Logan, Aviation Holdings and Dr. Charles C. Edwards, an orthopedic surgeon and entrepreneur who had led about 30 business enterprises over his 33 year career, bought Kiwi's assets, in a deal that included a Huntington Station, New York investment firm called NJS Acquisitions, which invested $3.5 million for a 20% stake.[7] In its first five months under Edwards hands-on leadership, Kiwi ended service from Atlanta to Palm Beach and Orlando, and added service from Newark to Boston and Tampa, from Boston to Palm Beach, from Chicago to Tampa, from Atlanta to Tampa, and (on a seasonal basis) from Orlando to San Juan, Puerto Rico.[7]

By the end of 1998, Kiwi had an operating loss of $19.8 million and a net loss of $20.6 million; by February 19, 1999, the carrier owed more than $750,000 to airports.[11] By March 23, the U.S. Department of Transportation (USDOT) announced plans to revoke Kiwi's operating certificate for failing to meet federal fitness standards for air carriers.[11][1] According to an article in The New York Times, Kiwi was the subject of two separate USDOT investigations, one about the airline's financial and managerial fitness and another about its safety—while Kiwi was on the verge of receiving a $3 million bailout from Pan American Airlines (to address the USDOT concerns about its financial and managerial situation), the termination of its operating certificate for safety reasons meant it would be months before the airline could fly again.[2]

As of March 1999, Kiwi was a charter carrier with four leased jets flying to six cities, with 500 employees and 11 months of paid advance reservations for about 80,000 seats.[2]

In December 1999, a bankruptcy judge approved the liquidation of the airline.[12]